- Slides: 8
Demand Section 1 – Nature of Demand
Quantity Demand © The amount of a good or a service that a person is willing and able to buy at each particular price during a given period time.
Law of Demand ©Increase in a goods price causes a decrease in the quantity demanded. ©A decrease in a goods price causes an increase in the quantity demanded. ©INVERSE RELATIONSHIP Price Quantity Demanded
Income / Substitution Effect © Income Effect – the amount of money, or income, that people have available to spend on goods and services is called their purchasing power. Any increase or decreases in a persons purchasing power caused by change in price is called the income effect. © Substitution Effect – the tendency of consumers to substitute a similar, lower priced product for another product. Example – Dr. Pepper and Dr. Skipper
Diminishing Marginal Utility ©The more units consumed of one item, the amount of satisfaction received declines.
Demand Curve © Plots the information on the demand schedule. PRICE Quantity Demanded
Bartz’s Demand Slope = Change in Y / Change in X Pay attention boys and girls!
Slope © Slope = rise = change in vertical axis = y run change in horizontal axis x Example - slope = -5 25 What does this mean? If my price is lowered 5 $ then there would be 25 more products demanded by the public.